A server hands the bill to a few college students: just over $20 for three burritos. One student takes out his wallet, drops a credit card onto the bill tray and says to his buddies, “Just Venmo me.” His companions open their Venmo smartphone apps, and in seconds they each send $7 transfers to their burrito-buying friend. No cash swaps, bank transfers, or IOUs required.
Nowadays, that’s how easy it is to transfer money using digital wallets. These have been UX designed carefully to serve a user need in a very sleek and efficient way. It’s no wonder that digital wallets like Venmo, Circle, and Messenger Payments are growing at a breakneck pace. They’re already the preferred money transfer method for more than 60 million Americans. A finder.com study found that 50% of American Millennials (i.e. people aged 18-34) use digital wallets regularly, and other generations are catching up.
Clearly, mobile payment apps are killing it when it comes to domestic transfers. The PayPal-owned company Venmo recorded $5.6 million in payments through the app in the fourth quarter of 2016 alone. This is more than double the same quarter’s volume in 2015 ($2.48 million).
With traditional banks charging lots for international transfers, there’s a strong demand for innovative international transfer providers too.
Sleek, user-friendly websites
We’re starting to see more money transfer providers catering to their customers in a way that challenges the traditional anti-UX marketing ploys of some banks.
Banks are notorious for creating bad user experiences online in an effort to lure customers into speaking to a sales rep for advice. They are also less interested in money transfers as a revenue source compared to their bread and butter – their loan books.
At finder.com, we tested the experience of the transaction process on numerous sites from start to finish using usertesting.com. We recruited a group of people to send live transfers, generate over 2,000 quotes, and we used 585 data points to verify product details on provider websites. Everything from the ease of sign up, attractiveness, credibility perception, success rate, accuracy of information displayed, documentation, to estimated time of delivery, and more were tested.
We found that international money transfer providers focus more on user experience and a streamlined website than anything else. After benchmarking numerous sites, we found that UX appears to be the number 1 priority for these providers, above speed, exchange rates, and trust. These providers are priding themselves on user experience and the takeup of new technologies such as apps and smartphones, surpassing many banks in this space.
Affordable international money transfers
Circle is a provider that shows incredible potential: you can use it for overseas transfers between US dollars, Euros, and British pounds. Best of all, the app charges no fees for depositing, sending, receiving, or withdrawing money. You’ll still pay a small fee for a transfer — Circle charges a 0.25% markup above the mid-market rate when converting your money. But anybody who’s ever transferred money through a bank knows that’s a dream of a deal.
Though Circle covers popular currencies, the app is still missing almost 200 more from around the globe. Unfortunately, this lack of variety is the same problem most payment apps suffer from. If digital wallets are to become behemoths in international transfers, they need to support payments in many more countries.
Additionally, payment apps are still somewhat reliant on banks. Take Venmo: Your app-to-app transfer may be completed instantly, but your recipients probably can’t spend the money until they get it off the app. That involves a one- to three-day transfer to a bank account.
So, mobile apps aren’t always faster than traditional money transfer options. They’re beaten handily by Western Union, for example, which can complete a cash transfer in just minutes.
Digital wallet providers shouldn’t give up hope in the international money transfer market. In fact, they’re the ones to watch out for. As the competition heats up, mobile app providers will add more currencies to their stables, making them increasingly attractive for international transfers.
The future of digital wallets and instant payments
Just as many of us use credit cards for everything now, in the future it’ll be normal to buy everything with your phone. The fact that millions of stores already accept Apple Pay suggests that millions more will soon embrace digital payments.
On top of this, digital wallet providers will devise new ways for consumers to skip bank transfers. For instance, Square Cash offers virtual credit cards to users. Which means that as a Square Cash user, you can receive a transfer and immediately spend the money as if you had your Visa in hand. Now that is truly an instant transfer.
Yes, digital wallet providers are experiencing growing pains in international money transfers, but once they work out the kinks, it’s a matter of time before they become dominant players in overseas transfers just as they’re rocking the domestic transfer market.
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